103.  Transactions, operations or schemes for purposes of avoiding or postponing liability for or reducing amounts of taxes on income

(1)     ……….

(2)     Whenever the Commissioner is satisfied that –

(a)     any agreement affecting any company or trust; or

(b)     any change in –

(i)      the shareholding in any company; or

(ii)     the members’ interests in any company which is a close corporation; or

(iii)    the trustees or beneficiaries of any trust,

as a direct or indirect result of which –

(A)    income has been received by or has accrued to that company or trust during any year of assessment; or

(B)    any proceeds received by or accrued to or deemed to have been received by or to have accrued to that company or trust in consequence of the disposal of any asset, as contemplated in the Eighth Schedule, result in a capital gain during any year of assessment,

has at any been entered into or effected by any person solely or mainly for the purpose of utilising any assessed loss, any balance of assessed loss, any capital loss or any assessed capital loss, as the case may be, incurred by the company or trust, in order to avoid liability on the part of that company or trust or any other person for the payment of any tax, duty or levy on income, or to reduce the amount thereof –

(aa)   the set–off of any such assessed loss or balance of assessed loss against any such income shall be disallowed;

(bb)   the set-off of any such assessed loss or balance of assessed loss against any taxable capital gain, to the extent that such taxable capital gain takes into account such capital gain, shall be disallowed; or

(cc)   the set off of such capital loss or assessed capital loss against such capital gain shall be disallowed.

(3)     ……….

(4)     If in any objection and appeal proceedings relating to a decision under subsection (2) it is proved that the agreement or change in shareholding or members’ interests or trustees or beneficiaries of the trust in question would result in the avoidance or the postponement of liability for payment of any tax, duty or levy imposed by this Act or any previous Income Tax Act or any other law administered by the Commissioner, or in the reduction of the amount thereof, it shall be presumed, until the contrary is proved in the case of any such agreement or change in shareholding or members’ interests or trustees or beneficiaries of such trust, that it has been entered into or effected solely or mainly for the purpose of utilising the assessed loss, balance of assessed loss, capital loss or assessed capital loss in question in order to avoid or postpone such liability or to reduce the amount thereof.

(5)     Where under any transaction, operation or scheme-

(a)     any taxpayer has ceded the right to receive any amount in exchange for the right to receive any amount of dividends; and

(b)     in consequence of that cession the liability for normal tax of the taxpayer or any other party to the transaction, operation or scheme, as determined before applying the provisions of this subsection, has been reduced or extinguished,

the Commissioner shall determine the liability for normal tax of the taxpayer and any other party to the transaction, operation or scheme as if that cession had not been effected.

(6)     Where the Commissioner has applied the provisions of this section in the determination of any taxpayer’s liability for any tax, duty or levy imposed in terms of this Act, the Commissioner shall not exercise his discretion in terms of the provisions of section 89quat(3) or (3A) so as to direct that interest shall not be payable in respect of that portion of any tax which is attributable to the application of this section.

104.  ……….

105.  ……….

106.  ……….